Before lighting the month of November on fire, officials from the league and players’ union did reach an agreement last week on luxury tax reform last week during NBA lockout negotiations. Howard Beck of the New York Times reports that players agreed to boost the penalties for teams with payrolls well over the salary cap. The old system included just a dollar-for-dollar penalty over the luxury tax threshold, which proved to be a deterrent for only about half of the league in any given season.
NBA Lockout Deal On Luxury Tax Would Boost Penalty For High-Payroll Teams
Beck reports that the new luxury tax -- once the league restarts operations, either soon, in a few months or next year -- will charge teams over the threshold a 150 percent tax up to $5 million over the threshold. From there on, the tax would be 175 percent up to $10 million above the line, 225 percent up to $15 million over the line and 300 percent above that. Beck calculates that the L.A. Lakers, who paid $20 million in luxury tax last season thanks to a $90 million payroll, would have paid $42.5 million in tax under this system.
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